Chip Stocks Rise On Reports China Will Pause Spending

Chip stocks gained in early Wednesday trading after a report by BNN Bloomberg said China is halting significant investments in building a chip industry to compete with the US.

Citing people familiar with the matter, the report states that a Covid resurgence in the country has weighed on China's finances and forced top officials to discuss how to move away from expensive subsidies that have so far yielded little.

At the time of writing, Micron Technology (NASDAQ: MU) is up over 5%, Advanced Micro Devices, Inc. (NASDAQ: AMD) has gained 2%, and NVIDIA (NASDAQ: NVDA) is trading 2.6% higher.

They added that while some policymakers are pushing for incentives of up to 1 trillion yuan ($145 billion), others are pushing back against the approach and are instead seeking alternatives to assist homegrown chipmakers, such as reducing the cost of semiconductor materials.

The potential move would represent a shift in Beijing's approach to the industry, which is seen as crucial in challenging American dominance and safeguarding its economic and military competitiveness.

By Sam Boughedda

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